The world’s leading carbon credit certifier – used by Disney, Shell, Gucci and other big corporations for climate claims – has said it will phase out and replace its rainforest offsets programme by mid-2025. Earlier this year a Guardian investigation found the existing scheme was flawed.
Verra, the main guarantee of credibility for the rapidly growing $2bn (£1.6bn) voluntary offsets market, has committed to scrapping its rainforest protection programme by July 2025 and introducing new rules, which it is developing. A senior Verra figure said this week it was time to move on from the current system.
The non-profit has been consulting on the change since 2021 but has not yet announced the final rules.
In January, a nine-month investigation by the Guardian, the German weekly Die Zeit and SourceMaterial found widespread problems with the system. Analysis of a significant proportion of Verra projects indicated more than 90% of its rainforest offset credits do not represent genuine carbon reductions. Human rights issues are a serious concern in at least one of the offsetting projects co-run by the NGO Conservation International and the Peruvian governments, with evidence people had been forced from their homes.
From the band Pearl Jam to easyJet, Lavazza to the housebuilder Berkeley Group, Verra’s rainforest carbon offsets have been used by internationally renowned companies. Some have labelled their products “carbon neutral”, or told their consumers they can fly, buy new clothes or eat certain foods without making the climate crisis worse. In Singapore and Colombia, companies can buy the offsets instead of paying carbon taxes.
The investigation indicated that many claims based on the rainforest credits, which are generated by predicting deforestation that would have happened in the absence of the conservation projects, were largely meaningless, putting organisations that buy the offsets at risk of greenwashing. Verra heavily disputed the findings and said it remained committed to rainforest conservation schemes.
In the UK, EU and US, there is growing regulatory scrutiny of what companies can say using carbon credits, including claims of carbon neutrality.
The US non-profit said it would stand by current methods for producing rainforest offsets in the interim even though authors of Verra’s own rules for the carbon credits say they are flawed and open to exploitation, potentially allowing tens of millions of worthless carbon credits to be issued and sold to companies in the meantime.
Last month, the non-profit said it would update its methodologies in the coming months and the new methodology would be available this year. It said buyers would be able to request that a project uses the new rules. Verra has expanded its staff and team reviewing rainforest offsetting projects amid rising frustration with the organisation over delays, which it said reflected overwhelming demand for its services.
It comes amid growing scrutiny of the carbon offsetting sector’s ability to mitigate climate breakdown despite efforts to transform it into a multibillion-dollar industry, which is unregulated and insiders say is rife with conflicts of interest, warning many stand to lose money if fewer credits are approved. Many organisations in the sector earned millions during the pandemic when demand for nature-based credits soared.
Verra earns $0.10 (8p) for every credit it certifies and approves tens of millions each year, increasing the non-profit’s revenues dramatically as the market has grown. David Antonioli, Verra’s chief executive, has said its deforestation credits require a “leap of faith” while authors of the rules for credits acknowledged there were problems.
Charlotte Streck, a co-founder of Climate Focus, which developed a leading rainforest offsetting Verra methodology, said the rules could be reinterpreted and exploited, and that the system needed to change. Kyle Holland, the author of a widely used methodology, said it was “tempting to abuse the flexibility of these models” that Verra allows. Lucio Pedroni, another author, said measuring avoided deforestation was difficult but the system had been abused by some users, resulting in overstated claims.
Prices and demand for Verra’s rainforest offsets dropped after the investigation, following a longer-term fall in the market since it peaked in 2021. The investigation was followed by a series of exposés about the industry from other outlets.
On Tuesday, Verra’s senior director of forest carbon innovation, Julie Baroody, who is responsible for the rainforest offsets programme, told a meeting with academic and industry experts about the issues raised by the investigation and said the system would be replaced.
“We need to be moving on from the current approaches and we are doing that. But for now, we still stand by all of our current methodologies as the best in class and we’ve reviewed them over the years. We will be revising certain parts of them going forward until we have this new methodology in place at which point in time, we will phase out the current methodologies,” said Baroody.
Verra confirmed to the Guardian that it anticipated all projects would have switched to the new system by July 2025. Many projects would change before that date once deforestation data became available, it said.
Britaldo Soares-Filho, a professor in environmental modelling at the Federal University of Minas Gerais in Brazil, whose land use change software is used by some projects to generate carbon credits, said there was a contradiction in Verra’s decision to replace its system.
“When I saw those people using our models in their projects, I saw that I was part of this mess. I have a responsibility to demystify [the system]. Verra has validated credits using disgraced methodologies and now they say they are going to change everything. Those credits are mostly hot air. What’s going to happen to the projects? There are a lot of question marks out there,” he said.
A Verra spokesperson said the organisation was a non-profit and it charges fees to cover costs, and is committed to providing the highest levels of environmental integrity based on the best available science. Verra said it would continue to expand its staff and review the methodology in its programme every five years. It recently hired a president dedicated to improving how Verra is organised.
• This article was amended on 14 March 2023. The subheading was revised to emphasise that it is the current rainforest protection methodologies that are being phased out. The timeline of work on the scheme’s changes and that of the Guardian investigation have also been further clarified.